Boustead Holdings Berhad Group (BHB) recorded a lower consolidated profit before tax (PBT) of RM14 million for the nine-month period ended 30 September 2019. The Group recorded a gain of RM120 million on disposal of plantation land. However, profitability was affected due to one-off impairments in the Property and Heavy Industries Divisions amounting to RM161 million, namely on hotel properties and MHS Aviation (MHSA) aircraft and goodwill. Excluding the said one-off items and impairments, the Group reported a PBT of RM56 million. Revenue for the period came in at RM7.8 billion.
For the third quarter ended 30 September 2019, the Group incurred a loss before tax of RM156 million. This was primarily due to the one-off impairments in the Property and Heavy Industries Divisions as described above. Revenue for the quarter stood at RM2.7 billion.
Segmental consolidated revenue and PBT for the Group’s Divisions for the first nine months in comparison to last year’s corresponding period are as follows:
Dato’ Sri Amrin Awaluddin, Managing Director of Boustead Holdings Berhad, said, “Despite headwinds, the Group recorded solid revenue growth for the nine-month period. However, due to the one-off impairments in the Property and Heavy Industries Divisions, our bottom line was impacted.”
“As we strive to achieve a turnaround for the Group, we are cognisant of the challenges we face in the current operating environment. We remain focused on enhancing efficiencies and extracting further value within the respective operating units, with a view to deliver sustainable earnings over the long-term.”
The Trading & Industrial Division recorded a higher PBT of RM120 million for first nine-months compared with RM117 million in the previous year’s corresponding period. This was driven by improved contributions from Boustead Petroleum Marketing, which benefitted from higher stockholding gains as well as better margins and sales volumes.
The Finance & Investment Division posted a PBT of RM78 million, a marginal increase from RM77 million in the same period last year. This was mainly due to stronger contributions from Affin Bank, as a result of lower credit impairment losses and higher net gain on financial instruments. The University of Nottingham in Malaysia also contributed positively, although this was partly offset by increased net finance costs and higher share of loss in a joint venture.
The Plantation Division registered a PBT of RM42 million compared with a deficit in last year’s corresponding period. This was primarily attributable to the gain on disposal of plantation land amounting to RM120 million. Nevertheless, the Division’s bottom line continued to be impacted by the decline in palm product prices. Average crude palm oil price for the nine-month period was RM2,011 per metric tonne (MT), a 16% reduction from RM2,391 per MT in the same period last year. Similarly, the average palm kernel price for the nine-month period was RM1,179 per MT, a 39% reduction from RM1,924 per MT in the same period last year. Fresh fruit bunches production for the period increased by 10% to 727,771 MT.
The Pharmaceutical Division recorded a lower PBT of RM34 million compared with RM45 million in the previous year’s corresponding period. While the Division registered an improved revenue, its bottom line was impacted by reduced margins.
The Property Division incurred a deficit of RM68 million, mainly due to impairment of hotel properties amounting to RM43 million. Excluding the said impairment, the Division recorded a loss of RM25 million. While the property development segment recorded better contributions from Taman Mutiara Rini, this was moderated by weaker results from the property investment and hotel segments.
The Heavy Industries Division posted a deficit of RM192 million, as MHSA was affected by impairment on its aircraft and goodwill. The Division’s other operating units also continued to be impacted. Excluding the said impairment, the Division registered a loss of RM74 million. While Boustead Naval Shipyard recorded a reduced loss due to better contributions from the Littoral Mission Ship project and unrealised foreign exchange gain, Boustead Heavy Industries Corporation continued to be affected by lower contributions from maintenance, repair and overhaul activities and reduced share of profit from joint venture companies.